Recession knocks local nonprofits
- Published: August 6, 2009
RECESSION IN THE VILLAGE
This is the seventh in a series of articles looking at how the unstable economy is affecting various aspects of Yellow Springs life, including businesses, nonprofits, the arts, housing and schools.
Almost a full year after the national economic seizure, nonprofit organizations in the village are feeling the squeeze in their budgets. The crash affected most markedly the heftily endowed, and it hurt most cruelly the service-oriented groups. While contraction to reduce expenditures is an option, many local nonprofits are choosing to maintain or expand their programs in hopes of riding out a temporary financial slump.
Especially for organizations that provide fundamental human services such as senior support and housing, demand only rises in hard times. These groups find that the only option is to reach out for greater support from individuals. So far, organizers say, Yellow Springers appear to be answering the call.
Rainy days for the arts
Three of four arts organizations interviewed for this article felt an unusually hard pinch this past year. The endowment for Chamber Music Yellow Springs shrunk, and public funding for Yellow Springs Arts Council, YS Kids Playhouse and Antioch Writer’s Workshop withered, according to leaders, who said all four groups used reserves to balance their budgets.
Chamber Music Yellow Springs lost 7 percent of its endowment income last year, according to CMYS President Jeff Huntington, and for the first time in its history the organization budgeted to be in the red for the 2008-09 season. Last year CMYS used $1,000 in reserves to balance its $45,000 budget, and this year, the group will use closer to $5,000 to come out even.
“It’s absolutely because of the economy — mostly due to the shrinking endowment and no payments from dividends and interest,” he said.
Local generosity made up for some of the group’s losses, and donations to CMYS reached a record high, which will allow it to continue to hold five high-calibre concerts plus several educational workshops for school children this season.
“The fact that people gave more than ever is really heartwarming,” Huntington said. “In view of how bad the economy is, it’s very encouraging. People’s hearts are really in the right place.”
CMYS also benefits from an exceedingly large volunteer force to keep its program running, money or no money. And Huntington feels comparatively lucky to have only lost 7 percent of the funds on the open market. Others weren’t so fortunate.
As a newly funded organization trying to find stable footing, Yellow Springs Arts Council was blown back by public funding cuts and now anticipates a 20 percent drop in the budget for 2010, according to organization president Sandy Love. Though the Arts Council’s largest revenue source, the Yellow Springs Center for the Arts Steering Committee grant (funded by the Morgan Family Foundation), is stable, its second and third largest sources, Yellow Springs Community Foundation and state and other foundation grants (Ohio Arts Council, Yellow Springs Endowment for Education and United Way) have fallen short this year.
To balance next year’s budget, Love sees the group casting a wider net for grants, corporate partnerships and individual memberships, as well as reining in expenditures and taking advantage of in-kind donations.
Like the Arts Council, the Antioch Writer’s Workshop also sustained a 20 percent drop in its budget this year, according to Love, who also leads that group. The one-week workshop that typically brings about 65 participants to Yellow Springs each July saw a 25 percent attrition rate in paying registrants, eight of whom signed up and then canceled because they lost their jobs or could no longer afford the travel expense, Love said. The workshop, which relies heavily on tuition revenue, drew a low of 50 full-paying participants. But because faculty, which is the workshop’s biggest expense, had to be hired well before the workshop filled, the organization fell to using reserves and minimizing the introductory event in order to meet the budget, Love said.
“Many other writer’s workshops around the country had a 50 percent dropoff, but we were still shocked,” she said. “We’re going to regroup to see how to pull back. We have no way of knowing what to expect, but we have to plan for a continued reduction.”
YS Kids Playhouse was caught in the same storm but weathered it better than some, according to YSKP managing director Lisa Hunt. By fortunate coincidence, YSKP recognized several years ago that it needed to replace its heavy reliance on contributed revenue (donations and grants) with activity-generated revenue (ticket sales and tuition). By developing year-round events and reaching out for participants in neighboring communities, YSKP was already strengthening itself from the inside when the recession hit. While the theater company this year lost about 15 percent in contributed income, largely from Ohio Arts Council and the Turner Foundation, and also took a 10 percent hit in activity generated revenue, the growth YSKP has experienced will help the group to stay its course.
In addition, because YSKP had a well-defined outreach plan, it received a supplemental $35,000 grant from the National Endowment for the Arts to implement the plan, Hunt said. That grant plus the expansion will enable the theater “to cover that decrease and perhaps a little more,” she said.
Hunt is also keenly invested in maximizing opportunities in the community to share administrative and logistical resources with other arts and nonprofit organizations in the village.
“This is the important message for nonprofits — the more ways we can think collectively of how to share resources will make all our operations more efficient,” she said. “Growth can mean building partnerships and alliances for more effective operations to save money.”
Foundations watch and wait
Two of the community’s larger endowment holders, the Yellow Springs Community Foundation and the Morgan Family Foundation, were affected most directly by the deep market losses. According to YSCF president Bruce Bradtmiller, YSCF projects an overall 20 percent loss in the revenue stream for 2009. While the annual campaign, which generates 30 percent of YSCF’s revenue, remained steady all year, and memorial gifts, which typically bring in 10 percent of the annual income, are unchanged by the economy, the reduction was due almost exclusively to losses on restricted endowments, which comprise 60 percent of the group’s revenue.
But instead of cutting back its gifts and reinvesting some of its income, YSCF saw a greater need for funds in the community and chose to use all the income it received from its own endowment to benefit local groups and individuals. Requests from organizations have turned from large capital items such as a new roof to things they would normally cover themselves, such as training workshops. And this year the foundation’s board members were more proactive about making money available to send children to camps. YSCF is on track to distribute $40,000 in discretionary gifts for the year, which is just slightly higher than average, Bradtmiller said.
A much larger fund, the Morgan Family Foundation bowed to a 31 percent loss in assets this year, according to fund manager Lori Kuhn. Because the organization is required by law to give away 5 percent of its total assets, even in years such as this one when it didn’t make that much in returns, the foundation liquidated some of its assets to meet its donation requirements. And though the foundation’s drop in value will be spread over five years, it will still be forced to spend in grants what it normally would reinvest.
In gross terms, the foundation gave away between $2 million to $3 million each year from 2005 to 2008, mostly to organizations in the area of St. Cloud, Minn. and Yellow Springs and Greene County. This year, however, Kuhn expects the foundation will give $1.9 million by the end of the fiscal year (about $400,000 less than in 2008). And it’s likely that the minimum payout for the following year will be less than 2009, she said. Grants for the foreseeable future will focus more directly on the Yellow Springs and St. Cloud communities, she said, and she anticipates that there will be fewer multi-year commitments and fewer grants for new operations in view of the inability to forecast in uncertain times.
“We haven’t yet seen the full effects of the economy in both the economic downturn and the effect on our grant making ability — this is a long-term thing,” Kuhn said. “There will be up years and down years, and hopefully the up years will make up for the harder times.”
Braced for increased demand
Due to the deflated economy, the families that the Yellow Springs Senior Center serves are in greater need than ever, according to Senior Center Director Rodney Bean.
“More and more families are significantly stressed, which affects senior members of those families and creates a bigger demand outside the family to meet their needs,” he said in an interview last month.
But the Senior Center that offers those services is stretched, too. The center lost close to 25 percent of its endowment income for 2009, which translates into a 6-percent overall budget decrease, Bean said. Last year’s annual appeal remained steady, but this year’s appeal has not yet happened, and the center had to increase the goal from $30,000 to $40,000 to make up for the loss and maintain current programs.
“If we meet the goals of the appeal, we’ll cover our losses — we haven’t cut services yet,” he said. “But if the appeal doesn’t come through, we’ll be in a serious situation. We’ve never seen this before.”
The other unknown for the center is the Greene County senior services levy, which accounts for half of the center’s revenue. Voters will decide in November whether to approve a .2 mill replacement levy to help service providers across the region.
Home, Inc. is another local service organization vulnerable to the whims of the economy. Home, Inc. gets one third to half of its revenue for both operating support and housing projects from state funds, according to Home, Inc. Director Marianne MacQueen. This year Home, Inc. was awarded just a quarter of the state grants it received last year, and in order not to reduce current operations, the organization was forced to use reserves to make up for the loss, MacQueen said.
In addition to income from rental units, home sale profits, and in-kind services, Home, Inc. also has an annual fund drive, which was not impacted from 2007 to 2008, but which may be reduced this year, MacQueen said. And for the homeowners Home, Inc. serves, MacQueen believes many are experiencing greater difficulty securing mortgages due to tighter requirements for credit scores and down payments.
“Though there are incentives to buy, my sense on the whole is that it’s harder for people to get mortgages, especially low-income people,” she said.
Last year Home, Inc. began an effort to start a housing development project, which if successful, could position the group to ride out this trouble spot. But as with so many other businesses, she said, it’s a wait and see situation.
“It’s that challenge of providing more services and fulfilling our mission while endowments shrink and people’s capacity to give has gone down.”
—NICK BOUTIS, Glen Helen Ecology Institute director
Dry season for land use groups
Even before the economy tanked, Glen Helen was positioning itself for the growth necessary to maintain its operations. The Glen was put in a precarious position when it lost funding and administrative support from Antioch University when the college closed in 2008. So under the leadership of Glen Helen Ecology Institute Director Nick Boutis, the Glen began a push to grow its programs by 20 percent each year. And for the past two years, the plan worked. Glen Helen Association membership increased from 500 to 700 people, and fundraising grew because “people stepped up and steered charitable money toward the Glen,” Boutis said.
But this past year was also hard for the Glen, which was $30,000 behind its fundraising goal, due to reduced endowment income and increased healthcare costs and capital needs for facilities maintenance. So it cast an emergency appeal, which the community answered. While the Glen did not grow this year, Boutis said, at least it did not fall behind.
“For all nonprofits it’s that challenge of providing more services and fulfilling our mission while endowments shrink and people’s capacity to give has gone down,” he said.
A bad economy is good in one respect for an organization such as Tecumseh Land Trust. When the economy goes down, the value of land for development purposes also goes down, which takes pressure off of landowners to sell and also pushes agricultural value back up, TLT Director Krista Magaw said in an interview last month. So in some sense, the local land trust is buoyed right now.
“It’s the most cost-effective time ever to buy easements — you can get a lot of farmland right now for the money,” Magaw said.
But budget-wise, TLT is having the same troubles as its nonprofit peers. Last year the land trust finished the year $11,000 short in cash due to one foundation grant that did not come through due to investment losses, Magaw said. And this year, while contributions are also down, organizations such as YSCF and the Turner Foundation that TLT typically relies on are reducing their gifts. This year, according to Magaw, the land trust has reduced its budget by about 5 percent and still expects to fall $15,000 short of its revenue goal.
So the land trust, which celebrates its 20th anniversary next year, is redoubling its efforts to grow by implementing more outreach programs in the Greene County and greater Dayton area. Magaw hopes to see the organization grow from its current 550 members to 850 by 2012. And staff also plans to be writing more grants this year.
On the easement side, there is still solid funding in place through the Clean Ohio fund and the Federal Farm and Ranch Protection program to help buy easements, Magaw said. However, because of government staffing cuts, fewer consultants are available to help landowners understand the easement purchase process and assess the value of their property, Magaw said.
The state and federal staffing cuts have also delayed the administration of those funds. That means TLT recorded about half the acreage placed under easement in 2009, about 2,000 acres, as it did in 2007 when it processed a high of 4,600 acres.
But the land trust hasn’t lost any projects, and 2010 promises to be a huge year for recorded easements.
“We’re grateful to the patient landowners who are committed to conserving their land,” she said.